India and China are likely to show resilience in the face of global economic slowdown, but both the economies are expected to report significant decline in growth rates, says a report by the British banking giant Barclays.
"The growth in emerging economies has slowed dramatically in recent months, with many countries now expected to contract in 2009," Barclays Wealth Research said in a report adding that "the larger countries should show more resilience".
Barclays further reiterated that the year 2009 would be a year in which most economies would enter a deep, and possibly protracted recession; policy makers would have to work exceptionally hard to turn things around.
In such a scenario, emerging economies are likely to expand by just 2.1 per cent in 2009, compared with 5.4 per cent and 7.5 per cent in 2008 and 2007 respectively.
India is likely to report a GDP growth of 7.5 per cent in 2008, which would further decrease to 5 per cent in 2009. The country would however rebound to some extent from its 2009 lows and is likely to report 6 per cent GDP in 2010, Barclays Wealth Research said.
Meanwhile, China which reported 11.4 per cent growth rate is likely to project a growth rate of 8.5 per cent, 7.6 per cent and 7.6 per cent in 2008, 2009 and 2010 respectively.
There will, however, be a huge divergence in the economic performance over the next 12 months. The larger less trade-dependent economies -- China, India, Indonesia, Brazil, Poland and South Africa -- will generally show a greater amount of resilience.
China will be the best performing economy, closely followed by India. Meanwhile, the worst hit would be the smaller and more open economies of Asia and Eastern Europe.
Central banks have cut interest rates across all regions and with the inflation further likely to fall back significantly, additional monetary easing is likely over the coming months.
"The sky is dark but there are glimmers of hope. Recent macro-economic data has not been wholly disastrous, the adjustment of inventories appears to be well underway and the policymakers appear increasingly willing to explore new approaches," Barclays Wealth Head of Research Michael Dicks said.
"The financial system remains extremely vulnerable. Policy shifts have failed to be fully convincing thus far. More needs to be done," the report added.
Meanwhile, the World Bank has said that the global economy is likely to shrink for the first time since World War II, with growth at least five percentage point below potential and likely to have long-term implications for the developing countries.
